There are no guarantees in life. Today you could be in tip-top shape living your best life but tomorrow you might be thrown into a deadly or scary situation and could come out of it alive or not. The only assurity we have is today. The ‘NOW.’ That is why you have heard numerous lecturers, motivational speakers, pastors, teachers, and parents tell you not to waste time doing unnecessary things. It almost becomes a routine to hear those words every day growing up and we do end up taking them for granted sometimes. Time is the most precious thing we have on this earth. By taking advantage of today you can take care of your tomorrow. Insurance helps us take care of our tomorrow.
Insurance is a means of protection against financial loss. It is a form of risk management; whereby you anticipate risk and if it happens, you have financial protection. It is a contract in which there are different policies. It requires you to pay a certain amount of money every month and this is referred to as a premium. They are of different types of and it is not limited to human beings. People that provide insurance are called insurers. Any loss that is suffered in the future will be taken care of financially by the premiums they paid.
Types of Insurance
There are private and public forms of insurance available. Public ones includes; Social security, Medicare, and Disability insurance which are funded by the government while Private insurance is offered and thus funded by private organizations.
You can pick a policy not only for yourself but also for your business or property. Let’s discuss some of the types of insurance-policies available:-
- Disability Insurance – This policy pays a certain percentage of an employee’s salary if they are unable to work due to an illness or disability.
- Life Insurance – This policy offers financial compensation in the event of one’s death or permanent disability, retirement, or at a set time. In that event, it will ensure that your family is secure and has a safety net. The benefits of having this policy are that:-
- The premium amount used for deducting tax shouldn’t be more than 10% of the sum assured at the end of the policy.
- The premium amount is deductible from your total taxable income.
- It has tax benefits.
- General Insurance – This policy caters to any loss except death. It compensates you for things such as your car, health, home, etc. This type of policy offers protection to your assets against loss, damage, and other liabilities. Let’s discuss more on the types of general insurance offered:-
- Health Insurance – This covers the cost of medical care. Depending on the company, it won’t always cover the cost of all procedures you may have gone through therefore find out what it covers to pick the one that suits you.
- Motor Insurance – It covers costs related to your car, bike, or commercial vehicle from accidents, fire, theft, or natural disasters.
- Home Insurance- This policy covers any damage that may happen to your home due to natural disasters or human-induced.
- Fire Insurance – It covers the reconstruction or repair of damages caused to your property by fire.
- Workers’ Compensation – This policy is taken up by organizations for their employees. A premium is paid to cover the costs of any injuries made to their employees while on the clock. It is very important, especially for entities such as factories, construction sites, or any job involving using heavy machinery.
- Malpractice Insurance – This policy is taken up by professionals such as doctors or lawyers who might encounter dissatisfied or wronged patients or clients that covers them from any claims made.
- Other Liability Insurance – This is an interesting policy as it came about in today’s society whereby one could have made an honest mistake yet be sued for it. It might be spilling a drink on someone or stepping on someone while crossing the street. Such a policy has fairly inexpensive premiums as the claims are never that serious.
Functions of An Insurance Company
- Capital formation that can be invested into generating income for the company.
- Risk pooling which means that the risk is shared.
- It offers a level of protection.
- It provides reliability because it eliminates the uncertainty of an untimely financial loss.
Having insurance is an added advantage in today’s society and knowing which cover is best for you and/or your family is important. We must remind ourselves that risks will always be there. Wouldn’t it be better to be adequately prepared if they do occur? It is not something we look forward to but it is possible and it is better to be safe than sorry.
Frequently Asked Questions
- How do I know what insurance company to use?
The best insurance companies offer competitive pricing, strong financial ratings, stability, and good reviews.
- Can I cancel my insurance policy?
Yes, you can if you are dissatisfied with its terms and conditions.